Dealing with the employee engagement deficit

Four years ago, David MacLeod and Nita Clarke were asked by the Government to look into engagement levels in UK businesses and how they were affecting business performance. When their report was published in 2009, it received a lukewarm reception among HR professionals for being too high level and lacking in practical advice.

The report’s main conclusion is that, while awareness of the importance of engagement is increasing, the UK has what the taskforce terms an “engagement deficit”. Based on results from several surveys, it estimates that only around one-third of UK workers are engaged, while output per hour is down 15% compared with the rest of the G7 nations, according to figures from the Office for National Statistics. According to Engage for Success, improving the UK’s national engagement levels could potentially unlock a further £25 billion in gross domestic product.

Link between engagement and performance

The link between engagement and performance is clear, according to Dr Jack Wiley, executive director of Kenexa’s High Performance Institute (HPI), whose annual WorkTrends report was one of the key data sources for this latest piece of research.

“Engaged workers care more, work harder and stay longer. If they’re truly engaged they put in more of themselves into the work,” he explains. “Organisations need to look at what it is that drives engagement higher or lower. As drivers such as clarity of vision or mission become muddled, managers lose sight of the overall goal, or the organisation loses its ability to match its values – then you’ll see engagement decline.”

The HPI’s latest report found the UK still languishes in the low-to-moderate level of engagement in its country-by-country comparisons of staff engagement, with a score of 49% compared with an average of 57% globally.

Contributing towards an improvement

But what can organisations do to contribute towards an improvement? David Walker, commercial director of Personal Group, a rewards and benefits company, likes to quantify engagement as “unleashing discretionary effort – so when there’s a tender due or a major deadline ahead, your staff understand the organisation’s goals and will go the extra mile to get the work done”. By unlocking this, he adds, companies should then be able to see a tangible result. Perhaps they win the tender, improve revenue or customers enjoy a higher level of service.

Some of the employer examples in the report are testament to this. Consulting firm PricewaterhouseCoopers, for example, found that voluntary staff turnover increases 12 months after engagement scores fall, while its top performing divisions in terms of engagement also have higher average client satisfaction levels and higher average gross margins. Meanwhile, in the NHS, patient satisfaction is higher in NHS trusts with higher employee engagement.

Defining engagement

However, defining what engagement means to each organisation can be a challenge, as can demonstrating a direct correlation between higher engagement and improved performance when there are so many other factors in play. While the original MacLeod report outlined four key “enablers” to employee engagement – a clear strategic narrative, engaging managers, employee voice and organisational integrity – the emphasis on each of these drivers may differ between businesses and even divisions within them. MacLeod and Clarke acknowledge this, citing its lack of a singular definition as one of the reasons “engagement” as a concept is often greeted with cynicism by some.

Wiley warns against trying to tie engagement to one particular goal or measure in the organisation – as it will typically be a number of factors that drives it up or down: “When we think about engagement in the HR community, it’s sometimes oversimplistic, that it’s all about your relationship with your line manager. Yes, that’s important, but it’s also important that the leaders at the top establish a compelling vision and articulate that. After all, if I love what I’m doing and understand what we can achieve as a company, I’ll stick with a boss I don’t like.”

Employees feeling less positive

Wiley explains that, at the beginning of the recession, engagement levels were higher as people were grateful to have a job and be able to provide for their family. Since then, though, as workforces have reduced and workloads have increased, employees have felt less positive about their work and this is when the “productivity deficit” can take its toll.

“What happens under these conditions is you see voluntary resignations, and if you’re losing high potentials or high performers that can be very hurtful to your organisation – it exacerbates the experience for those that have been left behind,” says Wiley.

Engagement may be difficult to quantify in the same way as a financial measure, but employee surveys are a useful way of gauging how staff feel towards the organisation. IT consulting and outsourcing company Capgemini, like many companies, runs an annual survey and from that extracts an engagement index so it can easily track shifts up and down (see box).

But Debra Cadman, HR director of business and core services at the company, says that simply knowing how staff feel is not enough: “Our survey is not the be all and end all; you have to follow up on what it tells you. We always ask whether they feel that results have been acted upon and this figure has increased in every single business division in the UK.”

Shortlist of priorities

Wiley agrees: “Survey your employees and make a shortlist of priorities for follow-up. Clarify why employees feel the way they do – do a root-cause analysis. Don’t just jump into action without doing this first. Then merchandise your success, close the loop and show employees what the outcomes of your actions were.”

The latest report from Engage for Success makes it clear that organisations should see the UK’s need to raise its engagement game as an opportunity rather than a threat. As evidence on the link between more engaged employees and better performance gathers and awareness improves further, business results will surely follow.

Engagement at Capgemini

IT outsourcing and consulting company Capgemini aims to engage with its employees on two levels: individually and as a collective.

HR director for business and core services Debra Cadman explains that individual engagement is fostered through regular line manager updates, using internal networking platform Yammer to open up conversations with other employees. Collectively, the company is committed to working with work councils (known as “forums”) in each of its six business units in the UK. It also engages regularly with its unions, and their representatives often sit on the work councils.

“It’s all about conversation, both individual and collective,” Cadman says.

While she admits the company has no formal strategy in place around engagement, its annual employee surveys give her and the rest of the HR team a clear idea of any issues: “A lot of the things we do link to engagement, such as our work with sustainability, or with local communities, which all boost morale.”

In addition, the company’s flexible benefits package is well utilised, with 86% of staff opting to change around their benefits to suit them at the last opportunity.

One tangible benefit from greater two-way engagement with staff came recently when some employees were under threat of redundancy after a reduction in public-sector client revenue. During the consultation process, staff came up with an idea for changing how bonuses were accrued and suggested offsetting this against redundancies. Around 98% of the jobs were saved.